Liberal Democrats would resurrect Gordon Brown’s ‘golden rule’

Vince Cable, Liberal Democrat leader, gave a pre-Budget speech in the City of London in which he proposed reviving the golden rule, which states that, over the economic cycle, government will borrow only to invest and not to fund current spendingWiktor Szymanowicz/REX/Shutterstock

The Liberal Democrats would resurrect Gordon Brown’s “golden rule” on the public finances to ensure fiscal discipline while investing in Britain’s housing and infrastructure, Vince Cable, the party leader, has said.

He would use the rule’s flexibility to borrow for housebuilding and rail projects but ensure that the state ran a balanced budget on day-to-day current spending, such as welfare and education.

The government was missing an opportunity by sticking with plans to balance the books by 2025 because properly targeted investment “can make a return for the economy and you can borrow at nearly zero interest rates”, Mr Cable claimed.

To push a national focus on growth, he added that he would change the Bank of England’s mandate from 2 per cent inflation to…

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